Crypto Bathing, Wire Harness Resilience, ESPN - DTC Plans

May 13, 2022
It’s a retail consumer facing kind of day as we talk about some major shifts of recent norms. We dive into crypto’s current fallout as well as Disney’s ad-supported strategy for a completely DTC version of ESPN. We also celebrate the resilience of Ukrainian workers who are supplying vital harnesses to the Automotive Industry. 
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Crypto takes a polar plunge as its primary currencies Bitcoin and Etherium are worth less than 50% of their peak. 

  1. Bitcoin 69k in November to 25,332 yesterday.  Currently hovering around 30k
  2. Eth 4,867 to 1,701. Currently just over 2k
  3. Decentraland .80 to 5.91 to .71 all in 6 months
  4. Brian Armstrong, Coinbase founder, has lost 82% of his wealth. Down to 2.2B
  5. TAKE AWAY: All those millennials who are in crypto aren’t as flippant with their dollars as they were last month. Affordability issues are broadening. 

ESPN planning on a full DTC transition

  1. On a call with investors, CEO Bob Chapek discussed making ESPN exclusively a streaming property, noting that Disney would only do so “when it’s going to be good for our shareholders.” 
  2. “When we do, we will be able to fully go into an ESPN DTC model,” said Chapek. “It will be the ultimate fan offering that will appeal to superfans of sports.”
  3. He also noted the power of sports as Disney rolls out an ad-supported streaming offering.
  4. TAKE AWAY: Attention is the most valuable asset in marketing, entertainment, and Automotive

German supplier Lenoi reports Ukraine wiring harness output nearing pre-war levels

  1. “Workers at Leoni's Ukraine factories, fearful that their jobs might permanently be lost, petitioned to come back to work, drawing up a plan on how to revive operations.”
  2. On a Q1 earnings call, CEO Aldo Kamper told shareholders, “We can fully service customer demand out of our Ukraine facilities, which is fantastic news, “We hadn't expected that when the war broke out.” 
  3. 7,000 employees in Ukraine, out of a total global workforce of 101,000
  4. TAKE AWAY: This is what a combined and compelling mission can accomplish.

Paul Daly  0:00  

Yo, what's up, everybody? Today we got some really interesting stuff. Crypto has taken a little bit of a ice shower. Some Ukrainian workers really coming through and ESPN going direct. Direct. Direct, like, double, triple direct. There's nothing else but direct. I will talk you know, today felt like it should have been Tuesday.

Kyle Mountsier  0:50  

This is true. Literally my whole family was like, I don't really understand what day it is right now because they're all thrown off by me being out like I'm thrown off by us being it's yeah, it's,

Paul Daly  1:01  

um, I'm so thrown off yesterday felt like a Monday. But it was Thursday. Friday feels Tuesday. You know, tomorrow is gonna be totally weird. We're probably what's gonna show up for work? It's not gonna yes, no, I really had some fun some sleep tomorrow. keeps asking me questions like feeling tired lately.

Kyle Mountsier  1:25  

my Apple watch just when I wake up says get back to sleep. That's all it says. Get back to sleep on the

Paul Daly  1:32  

ride. The Alarm Reset, you're

Kyle Mountsier  1:34  

not gonna do now you're not allowed to do that.

Paul Daly  1:36  

We're not gonna do that. Well, today is Friday the 13th for all you superstitious folks out there to kind of give any specific routines that you do on Friday the 13th

Kyle Mountsier  1:45  

night, I wake up like comes there's another there's another day

Paul Daly  1:50  

if we didn't put it in the show notes. We probably wouldn't even realize that but I bet there are some really, really superstitious folks out there.

Kyle Mountsier  1:58  

salt Going over their shoulders. And

Paul Daly  2:02  

I feel like it's like, baseball players are doing crazy things today is very suspicious group. Our soccer or soccer folks like superstitious? Oh,

Kyle Mountsier  2:12  

I mean, soccer fans are superstitious, but nobody plays soccer on Fridays. So we're getting like Tuesdays, Wednesdays, Saturdays, Sundays. That's all you get. So you don't have to worry about Fridays. Oh,

Paul Daly  2:25  

my gosh. Oh my gosh, I have a couple of fun announcements. Number one we're about right after the show bouncing into the authentic use cars room to celebrate the one year anniversary of all things used cars.

Kyle Mountsier  2:36  

That's crazy. That's really why I like the fact that I was still at a dealership when all things used car started kind of blew my mind this morning. Wow. As I was getting ready for the day. Yeah. Oh, yeah, you

Paul Daly  2:49  

are. So David Long, has led this room for a year now. And in our opinion, some of the most insightful use car conversations with some of the smartest people in the industry. Like for real for real. I would say this is the most insightful automotive room on the regular, there should be 1000 people in it every week. I shouldn't be without it at 200 We're gonna get there. That's our goal this year to get that sucker to 1000. I also want to say congratulations to asoto investor Patrick Abad for having the number one franchise automotive store store in the state of Georgia. Last for us

Kyle Mountsier  3:21  

car registrations. The only people that beat him were car maxes and Carvana does. And that's only because they're regionalised. Yeah, and

Paul Daly  3:28  

he still keeps some of the car maxes if you look. Yeah. So, you know, this is he's one of the people that, you know, we've known for a while. And that's reason we asked him to be an investor in a soda. And he's one of those folks that at this point, so a lot of people were like, No, I think I've heard of them. But and we were like, you're about to

Kyle Mountsier  3:45  

get to know about that.

Paul Daly  3:47  

And so that's all good. What, what else do we have to talk about? Quick? Oh, there's a little website that we registered yesterday. And it's a, so tu as ot We're not talking about it too much. But there may or may not be something there right now. Not a lot of details. But there may or may not be something at asotu We got to get in all things use carbon today. So we got to keep the show like to 15 minutes or less.

Kyle Mountsier  4:16  

Yeah, run. We gotta run. Let's get into the stuff. First of all, this isn't a long show note. I just got to if you want to type in Elon Musk's Twitter in the Google machine, and it'll just kind of crack you up. I watched one thing about what he said yesterday. And even the commentator was like, you know, in this big joke of a thing in

Paul Daly  4:40  

again, what's that when you type in,

Kyle Mountsier  4:43  

just type in Elon Musk's Twitter and find out the the most recent one on Elon has done so it's always just a grand story.

Paul Daly  4:51  

I really think he's just kind of a 12 year old at heart. Yes,

Kyle Mountsier  4:55  

exactly. Hey, but look, if you're doing all that you kind of have to be

Paul Daly  4:59  

right i So, if you're gonna take, you get ready to take that beating. It's like 12 year olds kind of got nothing to lose. You ever again. They're like, if you can serve you want, but I know what I want to do. And I'm gonna do I'm gonna do it. I'm gonna do it and watch you all wiggle and squirm because you take it so seriously. But he takes it seriously too, which is the anomaly of Elon.

Kyle Mountsier  5:18  

Yeah, exactly. Everything he does is like this is for real.

Paul Daly  5:22  

Yeah. It's driven by conviction. Gonna get us to Mars based on conviction and 12 year old likes to launch rockets in the air. It's a little bit of so you know, for sure for sure. So cryptocurrency you know, we talked about a lot on the show is taking an absolute polar plunge over the last few days, I mean, it's been going down but you know, so in cryptocurrency the primary currencies are Bitcoin and Aetherium. And they are worth both worth less than 50% of their, you know, 12 month peek, probably closer to 60%. Bitcoin was $69,000 per Bitcoin in November and now is 25,003 32. Hit yesterday right now. It is hovering around 30,000. I just checked Aetherium. It's down from $4,800 to $1,700. It's rebounded a little to 2000 decentraland, which is like the metaverse of Metaverse thing, right, follow this. It was like 80 cents a year ago, it spiked to five bucks, six bucks when Facebook announced like, Hey, we're going heavy. We're changing our name to meta and all that. And now it's back down to 71 sentence. Brian Armstrong, the founder of Coinbase, which you probably are familiar with. It's the biggest trading platform in cryptocurrency he's lost 82%

Kyle Mountsier  6:40  

is wealth. Yeah, I was reading something where like the top 500 richest people in the world have have less have lost, like $50 trillion, or some ridiculous number over the last five or six months just because the majority of their wealth is in stocks and cryptocurrencies. Yep. Right. And yeah, so it's really wild to I think we talked about this maybe earlier this week, just to see that everyone kind of thought that crypto was kind of the safe place for money. And recognizing now that it behaves almost exactly like the stock market, or it has been a recent

Paul Daly  7:16  

has been has been it was probably a little premature. Well, not probably definitely a little premature to say. It may be a safe place. But look, this is all one big experiment. Yep. We haven't been through many cycles. This is the first major impact that we're seeing. It's macro economic forces. But you know, thinking of how we joke about this, and there's a great, I think it's TurboTax or into it, where there's probably like a 25 year old dude. And he's looking at his phone. He's like, I'm a millionaire. And he's like, I'm not a millionaire. I'm a millionaire. I'm not a millionaire. Right. And so they were saying like in cryptocurrency, it's so volatile, like, you'd be rich and poor and rich and poor, all at once. And they approached it from a tax perspective. But the reality is, we've been talking about, you know, accepting cryptocurrency, at dealerships, we've been talking about this, you know, the millennial generation, saying that more than 50% of them have invested in cryptocurrency in the last year, right, which meant 90 days ago meant that they all likely had some substantial gains, right, that they were spending, right? Well, the flip is also relevant right now is that all those, you know that maybe the spending cash was flying a little bit more, right, a little bit more, a little bit higher model of a car a little bit more. It's not the case anymore.

Kyle Mountsier  8:33  

Yeah, maybe becoming a little bit reserved, it's interesting, because a lot of the energy was around all of the tax returns that we were going to see coming out, and that there were going to be higher tax returns more tax returns, and that they were going to be strength over their strength over a longer period of time. But what we're seeing is a balance of that, and the way that markets are reacting to inflation. And so I, you know, I'm hearing from some dealers that it's more of, there's not like a loss of traffic or like a downturn of engagement, but it's definitely still a leveling. It's not like the the accelerant that we thought q2 was going to have. I still think that there's still an accelerant when inventory comes back. And so I think that we're still going to see that lift at some point here and maybe q3, maybe maybe q4 If for some reason inventory holds off that long but I you know, there's there's definitely like, you know, we keep saying fix the roof while the sun is shining, fix the roof while the sun is shining. Like the volatility of the market means you cannot wait you can't rest on your laurels for things like that. Yeah,

Paul Daly  9:41  

that really that window I believe that Windows closing you know, last year and I think last week and all things use cars, talked about, you know, how to prepare for the coming hurricane warning, you know, and look for everyone who's paying attention, like now is definitely the time like we're getting toward the end of that window. And I mean, who knows for sure for sure, but I mean, all the indicators are pointing to you know, maybe maybe maybe the long standing ice cream party is over. I love ice cream party that's great. It felt like an ice cream party.

Kyle Mountsier  10:15  

We should have put it like that we shouldn't put it like that way before this

Paul Daly  10:20  

cream we got stuff I mean, we're going on no

Kyle Mountsier  10:23  

bar, the whole bar ice cream sundae party. I don't think we're out of it yet. Like, we're not trying to say doom and gloom, I think that there's still plenty to ride here we're still seeing super high use car margin super high you car used car prices, pricing, and we still have an inventory issue. So we're not we're just seeing a leveling I think and you know, really being aware of your processes and your people to make sure that we don't have things happen to us like a trailing indicator on what has been happening in the stock market or to companies like Carvana or Lightroom right that there's an opportunity in our size to make sure that we've got all of those things kind of taken care of

Paul Daly  11:03  

Yeah, and the supply issues are actually at this point going to be a significant asset right now. Because if right now can you imagine if everyone had 120 day supply on their lot Yeah, it would be buyers market all day all day. Another story that that we think is important to pay attention to even though not directly correlated with automotive but but still pretty close well Titan is the ESPN has announced that or turn flip their hand and showed us that they are really moving toward a directing to consumer transition. That means not not like cable right you're not gonna be flipping through your cable stations and find ESPN what a world we might live in on a call with investors CEO Bob chapek discussed making an exclusively streaming property noting that Disney if you didn't know Disney owns ESPN would only do so when it's good for their shareholders. And he said when we do we will be a quote, we will be able to fully go into ESPN DTC model direct to consumer, it will be the ultimate fan offering that will appeal to super fans of sports. And he also noted the power of sports as Disney rolls out.

Kyle Mountsier  12:10  

It's an all ad supported streaming offering. Oh, coming at

it that look, here's the thing. Every industry is dealing with this. Yep. Everybody's like direct to consumer. We've been talking about this in automotive for a hot minute. And it's like that's Oh, that's happening in streaming and in video services as well. So you know the Heads Up is hey, look, franchise model may is coming under attack in every every aspect of business. And it's because of controlling customer journey amount of ad dollars available subscription based services and seeking multiples and seeking, you know, recurring revenue, everything that we've been talking about. And so just a heads up that there are other forces outside of automotive talking about this model as well without a

Paul Daly  13:01  

doubt and the ad spin. Right? We know in automotive sports, the sports audience is very relevant audience is deep Disney goes in further into the ad world they understand here's the takeaway they understand the biggest asset is the attention, the attention to the consumers the biggest assets. So they're saying you know what, we're going to gather it all in one place and control the whole line. So whether that's

Kyle Mountsier  13:23  

imagine ESPN has a DSP that you can buy ads directly on similar to like an Amazon Oh, that's definitely. That's coming. So I

Paul Daly  13:31  

mean, whether it's marketing entertainment, or automotive attention, is what we need to focus on. last article, we've been following this but the German supplier llinois. Basically, they own the wire harness power Meyer harvest plants in Ukraine. And we've been saying like, hey, these workers are legit, even in the midst of a war. They're pumping out wiring harness, and they're almost back to pre pandemic levels. Here this this got me, workers at Illinois, Ukraine, factories, fearful that their jobs might permanently have been lost, petitioned to come back to work drawing up a plan on how to revive operations. Let's go. Right, they were like this is important. We'll figure out a way to get it done. If that's not automotive, if that is not automotive snaps for that? No, what is some articles are linked up in our show notes, especially in the podcast, but you know, they have 7000 employees in Ukraine. And this, in our opinion, is what a combined and compelling mission can accomplish. We need to do this together. And they did and they are doing it together. In the midst of a war. We don't have a lot of time today. We're heading into all things use cardroom. If anything, understand that things are changing, but you are in control of what's going to happen. Lean in this Friday. Lean in this Friday. Get ready for a big weekend. Because here we go.

Unknown Speaker  14:52  


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